Highlights
December merchandise trade deficit was NZ$159 million. Exports were up 9.4 percent while imports were up 5.9 percent. From a year ago, exports dropped 6.9 percent while imports were up 7.7 percent.

The seasonally adjust ted value of goods exported was up 0.9 percent in the December 2014 quarter. The increase in total exports was led by meat, up 15 percent. Seasonally adjusted milk powder, butter and cheese exports fell 9.5 percent in the December 2014 quarter, with quantities up 2.6 percent. Values have fallen 26 percent since the peak in December 2013. The decline in recent quarters was price driven. Seasonally adjusted imports showed little change, down 0.2 percent. The seasonally adjusted trade balance for the December 2014 quarter was a deficit of NZ$904 million.

For the year 2014, goods exports were up NZ$2.1 billion to NZ$50 billion from the December 2013 year. For the same period, goods imports were up NZ$2.9 billion to NZ$51 billion. This was influenced by a number of aircraft imports. The trade balance was a deficit of NZ$1.2 billion.

Definition
The international trade balance measures the difference between imports and exports of both tangible goods and services. Imports may act as a drag on domestic growth and they may also increase competitive pressures on domestic producers. Exports boost domestic production. Trade balance values are calculated by deducting imports (cif) from exports (fob).

Description
Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect the value of the NZ dollar in the foreign exchange market. Imports indicate demand for foreign goods in New Zealand. Exports show the demand for NZ goods in countries overseas. The currency can be sensitive to changes in the trade deficit run by New Zealand since this trade imbalance creates greater demand for foreign currencies. The bond market is also sensitive to the risk of importing inflation.

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